State Banking Group Sues over OCC’s Plan to Grant Special Charter to FinTech Firms

A group representing banking regulators from 50 states has sued the Office of the Comptroller of the Currency, opposing a plan to grant special purpose banking charters to FinTech firms. Late last year, OCC released a publication describing its initiatives “to better understand innovation occurring in the financial services industry and to develop a framework supporting responsible innovation” and sought public comments on a plan to explore special purpose national bank charters for FinTech firms. The Wall Street Journal reported that the Conference of State Bank Supervisors’ lawsuit argues that the OCC’s plan goes beyond the agency’s jurisdiction and that the OCC only has the authority to license nonbanks that can accept deposits; most FinTech firms are non-depository institutions. Consumer groups also are concerned that a special purpose banking charter would expose consumers to higher interest rates and greater risk, the WSJ reported. In a press release the CEO of the Conference of State Bank Supervisors said: “The OCC’s proposed action ignores Congress, seeks to preempt state consumer protection laws, harms markets and innovation, and puts taxpayers at risk of inevitable FinTech failures. This is a dangerous combination and one the court should decisively halt.”